Why AI-driven denials are a new Threat to SNFs and Post-Acute Care providers
A new Senate Subcommittee report has confirmed what many SNF operators already suspected: major Medicare Advantage (MA) plans are using AI to systematically deny post-acute care -regardless of patient need.
UnitedHealth, CVS/Aetna, and Humana, which collectively cover nearly 60% of MA enrollees, have dramatically increased their denial rates for post-acute care claims. The report revealed Humana’s post-acute denials were 16 times higher than average in 2022, while UnitedHealth’s denials doubled over two years. Behind the scenes? Proprietary machine learning models deciding when to reject coverage.
For skilled nursing facilities (SNFs), this is more than a headline. It’s a direct hit to census, cash flow, and operational planning.
How AI Is Being Used Against SNFs
The Senate report details how payers are:
- Using predictive models to flag and deny post-acute care requests before clinical review
- Penalizing staff who deviate from AI-generated decisions
- Avoiding transparency in denial criteria and appeal handling
NaviHealth (now part of Optum) was even found instructing staff not to assist providers with prior auth questions. UnitedHealth later convened a working group to predict which denials would be overturned - and aggressively challenged those that wouldn’t. This shifts the burden onto SNFs to prove necessity, even for medically justified care.
Why This Matters for Your SNF Revenue Cycle
If you’re a Director of Nursing, MDS Coordinator, or VP of Clinical Operations, here’s what’s at stake:
- Delayed authorizations: Slower admissions, longer hospital stays, and lost bed revenue
- Higher denial rates: Staff time spent on appeals instead of clinical care
- Lower PDPM performance: If care gets truncated or denied retroactively, reimbursements fall short
- Audit exposure: With AI models denying claims algorithmically, documentation and coding must be airtight
And these issues are not limited to MA plans - commercial payers and state Medicaid MCOs are beginning to follow suit.
What Leading SNFs Are Doing to Stay Ahead
In this environment, operational excellence isn’t optional. Top-performing SNFs are investing in proactive workflows that:
- Surface clinical signals early flagging comorbidities, isolation care, IV use, and NTA triggers on day 1
- Align diagnosis mapping to ICD-10 and PDPM groupers ensuring claim defensibility
- Track ARD and IPA events in real time to optimize timing and capture payment shifts
- Validate documentation language before submission to match what auditors and AI-denial systems expect
These changes aren’t just compliance best practices. They’re revenue protection strategies.
Automation as a Defensive and Strategic Lever
To keep up with AI-powered payers, many SNFs are deploying AI of their own - not to replace staff, but to:
- Analyze hospital packets for hidden NTA or SLP triggers
- Auto-generate structured summaries for MDS assessments
- Surface IPA opportunities based on clinical documentation
- Crosswalk diagnoses to optimal PDPM groups
Some facilities have reduced technical denials by up to 40% while recovering hundreds of thousands in missed revenue - all without hiring more staff or switching EHRs.
The Bottom Line for SNFs and PAC Providers
AI in payer hands isn’t going away. The only viable path forward is to match automation with automation - building denial-resistant workflows and reimbursement-focused operations.
SNFs that adapt will not only protect their margins, they’ll outperform peers still stuck in manual chart reviews and reactive denial management.
PDPM optimization, faster ARDs, and structured IPA oversight are no longer “nice to haves”. In today’s landscape, they are a revenue imperative.
Want to assess your facility’s denial risk? Start with a PDPM or prior auth workflow audit. The gaps may be costing you more than you think.
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